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Can gaming resurrect the NFT market? OpenSea thinks so • ZebethMedia

Today at ZebethMedia’s crypto-focused event in Miami, OpenSea CEO Devin Finzer discussed his business, and the future market for non-fungible tokens. The digital assets, better known by the acronym ‘NFT,’ saw their stock rise during the 2021-era crypto boom. NFTs became synonymous with neo-wealth bubbling up from the blockchain economy, as a number of image collections that employed the digital asset format reached pop-culture status and eye-watering prices. However, as ZebethMedia has reported, the evolving market for crypto-related activities and products is currently in a downturn. NFT trading volumes are depressed compared to year-ago levels, and elsewhere in the decentralized economy there’s chaos to be found as the implosion of exchange FTX continues to reverberate. This made Finzer’s appearance at the event potentially clarifying — in the midst of a downturn, where does OpenSea see the future for its core product category? Naturally given that he’s running a company in the space, we expected optimism from the tech executive. He delivered. Inside his perspective, however, a few key themes emerged that caught our attention. (ZebethMedia has riffed on the idea of how it re-ignite consumer interest in NFTs, it’s worth noting). First, gaming. Finzer argued early in his conversation with our own Anita Ramaswamy that the world of NFTs is “quite diverse,” going on to state that NFTs in games are a place where his market is seeing an “explosion in innovation.” The CEO also cited gaming as a market opportunity for NFTs to spark more consumer enthusiasm (OpenSea is working on assisting games and gaming companies mint NFTs). The union of gaming and digital assets has proved a popular theme for press coverage and founder activity. However, much focus during the last crypto boom focused on play-to-earn (P2E) games like Axie Infinity. But while Axie has seen its fortunes rise and fall, OpenSea appears to be yet bullish to gaming-related NFTs. As a person who has spent a reasonable amount of time in games like Diablo franchise, I can imagine certain use cases for the pairing, even if I remain a little bit skeptical of bringing real-world economics into most video games. The scale of Finzer’s excitement regarding NFTs and gaming indicates to this publication that it’s perhaps where we should be most focused when covering what the asset varietal can do next. Looking more broadly at the NFT market space itself, Finzer argued on stage that platforms like Instagram joining the industry will be net-positive. In his view, inclusion of NFTs from social companies may provide an on-ramp to the crypto market for regular folks. Given that, historically, such points of entry have been criticized as too steep, new methods of getting consumers into NFTs is likely welcome to his platform. The future of NFTs may be less crypto-focused than it has been. Finzer cited the recent Reddit NFT effort in a discussion of trust, consumers, and crypto more generally. Many Reddit NFT users are not aware that it’s a crypto-powered product, he explained. If consumers are willing to engage with crypto products outside of a crypto-native experience, it is easier to see how gaming and crypto could eventually find common ground. What’s ahead for the company? Not a native token, at least not yet, per our chat with OpenSea today. The company also didn’t want to talk about potential fundraises, though we do expect it to raise more capital in 2023. After listening to the chat, it felt like the era of pricey profile pictures had faded to the background. Now we have to see if the potential use cases for NFTs in other areas of the digital economy — and perhaps even IRL — can make the jump from possibility, to reality.

Bahama homes were purchased with FTX corporate funds • ZebethMedia

A new bankruptcy filing, first reported by CNBC, shows that FTX’s corporate funds were used to purchase homes in the Bahamas among other personal items. The details arise less than a week after the now infamous crypto exchange filed for bankruptcy – a decision that founder and former CEO Sam Bankman-Fried said he regrets. FTX’s new CEO, Enron wind-down veteran John J. Ray III, said in the filing that he never in his career had “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in the filing. The document states that corporate funds of the FTX group were used to purchase homes and other personal items for employees and advisors. Ray added that “certain real estate” was recorded in the personal names of employees and advisors, and “there does not appear to be documentation for certain of these transactions as loans.” The newly-installed chief executive makes it clear that he’s not blaming all FTX employees for the potential mishandling of funds. “Although the investigation has only begun and must run its course, it is my view based on the information obtained to date, that many of the employees of the FTX Group, including some of its senior executives, were not aware of the shortfalls or potential commingling digital assets.” If that possible lack of blame extends to the real estate transactions is not clear. He adds that current and former employees are some of the people most hurt by FTX, and that “these are many of the same people whose work will be necessary to ensure the maximization of value for all stakeholders going forward.” FTX’s downfall began last week after Binance backed out of a deal to acquire the crypto exchange as a result of a due diligence process. News reports that FTX was mishandling funds and under investigation soon bloomed into the company filing for bankruptcy. Bankman-Fried, meanwhile, claims that he is still hoping to raise a $8 billion lifeline for the company. “Everyone goes around pretending that perception reflects reality, it doesn’t,” Bankman-Fried said in a Twitter conversation with Vox reporter Kelsey Piper earlier this week. “Some of this decade’s greatest heroes will never be known, and some of its most beloved people are basically shams.”

Plaid names former Meta exec as its new payments head • ZebethMedia

Plaid today announced that it has named Meta veteran John Anderson to serve as its new head of payments. The fintech startup has slowly been evolving its offerings beyond its core product of account linking. Earlier this year, it moved into identity and income verification. Payments feels like a natural evolution of its business.  In an interview with ZebethMedia, Anderson explained that while Plaid will be personally facilitating payments through its Transfer offering, it will also continue working with its dozens of payments partners, which include the likes of Square, Stripe, Marqeta, Gusto and Silicon Valley Bank. Its end goal is to generally give consumers more choice when it comes to bank payments. “There has been so much innovation on POS [point of sale] in the last 10 years, but purely digital — no physical interaction — experiences for payments is still nascent,” he said. “This is where we are focused.” In its own way, Anderson pointed out, Plaid has been involved in digital payments for years, by enabling nearly a billion ACH transactions for things like account funding and account-to-account transfers. Along the way, the company partnered with nearly 50 payments companies. In other words, Plaid has its services for clients that range from account verification to risk assessment and processing. It also has built its data products to be modular with the goal of “maximizing choice” for its customers and “ultimately expanding the use of bank payments.” “This time last year, same-day ACH grew by nearly 75% year over year with numbers in the trillions — that’s a lot of growth for an already sizable number,” Anderson said. “There is a lot of market for many players and overall Plaid works with a broad network of payment partners. We plan to invest — not shift — in that ecosystem and strategy.” So generally, when it comes to payments, Anderson said, Plaid is focused on building products that help companies have “more cost-effective, efficient and flexible bank payments.” “Much of that work is through our partners as we ultimately want to maximize choice for consumers and businesses,” he said. “This is why we take an ecosystem approach to payments. It is not an us versus them, but instead a ‘we’ working together to innovate and create better infrastructure that is safer, smarter and faster for all participants.” As mentioned, among Plaid’s payments partners is frenemy Stripe, which in May unveiled a new product of its own. Specifically, Stripe’s Financial Connections was designed to give that company’s customers a way to connect directly to their customers’ bank accounts, to access financial data to speed up or run certain kinds of transactions — exactly what Plaid has done historically. In working with its payment partners over the years, Anderson said that Plaid saw a consistent challenge — that it usually took several days for an ACH transfer to complete. “That’s because it provides settlement time to cover assessing returns and fraud,” he said. “But that speed of transfer is very limiting to many of our customers — if you’re someone like Robinhood who wants to be able to have customers fund their account instantly and immediately start trading, 2-3 days ACH clearing time feels like a lifetime.” Trying to solve that challenge led to the genesis of Plaid’s Signal offering, which uses machine learning to analyze more than 1,000 risk factors and provide scores and insights that Plaid says provide “more certainty that a transaction will settle,” so a company can accelerate access to those funds without increasing risk. “We wanted to use intelligent data signals to be able to identify low-risk ACH funding events that can clear immediately,” he said. “By accurately predicting risk and fraud, we can help companies build much more real-time funding solutions so their consumers can get going on their financial goals immediately.  Signal today is moving out of beta, during which Robinhood was a pilot customer. In addition to Robinhood, fintechs like WeBull and Uphold have incorporated Signal into their risk models “to unlock instant ACH,” Anderson said. “We currently de-risk nearly 3 million transactions valued at nearly $1.5 billion each month,” he said. “We’re excited to offer this service to more customers and empower them to expand the applicability of ACH-based bank payments and transfers more safely and securely.” Looking ahead, he said, Plaid is actively building and partnering on real-time payment rails.  Plaid’s RTP and FedNow products are designed to help drive further adoption of bank payments, Anderson said, “not only because of the speed and certainty of settlement, but also through further innovation across the financial and payment ecosystem.” “We want to unlock the next phase of bank payments with a focus on a great consumer experience, adapting Signal for emerging risk and fraud vectors, and other activities that will accelerate the adoption of real-time payments in the U.S. through our payment partners and customers,” Anderson said. Also, in an interview with ZebethMedia, Anderson explained his decision to join Plaid. The executive left Meta in March after a 10-year stint that included him serving as that company’s head of payments and commerce. Anderson said he was drawn to the space because simply, “finances are at the heart of everyone’s lives.” Acknowledging that the “world is increasing in inequity,” the executive described financial access as an “uneven playing field getting ever more bumpy.” “Across so many of this amazing generation of new financial services, the common thread is Plaid is there in the background helping them build secure data accessibility, fast payments and managing risk and compliance,” he said. It’s not Anderson’s first foray into fintech. He developed a fintech app called GroupCard that went on to be acquired by InComm, a $13 billion prepaid and payments technology company. He also at one time worked in payments at eBay. “As a developer of an early fintech app, I experienced firsthand the challenges that many of Plaid’s customers face today,” he said. “On a very personal level, I came to Plaid because I

Sateliot’s $11.4M Series A deck • ZebethMedia

You know what really sucks? Your IoT devices not being able to phone home. Rarely a problem when you’re in the center of a well-populated urban center with oodles of cell towers, but think of that water temperature buoy floating around in the Atlantic, an autonomous drone flying above the rain forest or a glacier-creep measuring sonde high up in the mountains. The fact is that about 90% of the planet has no cell coverage at all, and Sateliot raised a €10 million ($11.4 million) round of funding to change that. The company shared its pitch deck with us to take a deeper look, and so we will! Here’s the good and the bad of this high-flying space deck. We’re looking for more unique pitch decks to tear down, so if you want to submit your own, here’s how you can do that.  Slides in this deck Sateliot’s deck consists of 18 slides and is almost as pitched; the company redacted some of the info that goes into depth about how its tech works. Cover slide “90% of the world has no cellular coverage” — problem slide Team slide “To connect all NB-IOT devices from space under 5G standard” — solution slide “Near real-time connectivity” — value proposition slide “Standard protocol” — product slide “Sateliot is the #1 satellite operator” — “why us?” slide Market size slide Competition slide  Business model slide  “MNOs engaged and technical integrations ongoing” — traction slide  “Early adopters program” — go-to-market slide  Interstitial slide  Benefit slide  Progress slide  NGO program slide  Slogan slide  Closing slide Three things to love It’s always interesting to see companies that are trying to have an enormous impact on the space they operate in. Sateliot is making space for an incredible opportunity, essentially removing the need for infrastructure to make IoT solutions work from pretty much anywhere in the world with a clear view of the sky. It’s a story that could be told in so many ways, and I was excited to see how the company launched into things. Clear vision of the opportunity [Slide 2] Crisp and easy. Image Credits: SateliotI love a deck that very clearly states the problem it is solving, especially if it’s also able to highlight the advantage of solving that problem. Sateliot does that fantastically on its second slide — 90% of the world has no cell coverage, and this company is promising to change that. There’s not an investor in the world that won’t be able to see the benefit and financial potential of that. As a startup, if you can distill your problem, solution and opportunity this elegantly, you’ve got yourself a great launchpad to start weaving your narrative for your pitch. “Why us?” This is why… [Slide 7] Being the right team for the job is a crucial aspect of pitching. This is hella compelling. Image Credits: Sateliot If you have some reason why nobody else can truly solve the problem as well as you can, shout about it. It makes you a far more tempting investment target. One of the big questions an investor will be asking themselves is whether a particular company is well positioned to take charge of a market. In other words: Is there something about this team or company that gives them an unfair advantage over the competitors? This slide is labeled as “value proposition,” which is a little confusing. The slide doesn’t describe a value prop but a competitive advantage. It describes the “number of contributions to the 3GPP Standard,” but it doesn’t say what that means. Wikipedia has an answer that seems to indicate that this is very relevant, but I’d love for the company to have contextualized it on this slide. Those caveats aside: If it turns out that contributions to the standard are directly relevant to the company’s success and show that it’s particularly well positioned to corner this market, this absolute design disaster and word soup of a slide might actually be a powerful storytelling device. Scanning down the lists of companies that have made more and fewer contributions, there are a lot of big-name vendors. Seeing Sateliot in the top 25 or so — ahead of many other well-known companies — could suggest that there’s a significant moat in place. I wish the company had connected the dots for me, but if this slide means what I suspect it means, it makes up for the distinctly subpar “team” slide (which we’ll discuss in a bit). As a startup, what you can learn here is that if you have a moat, or some reason why nobody else can truly solve the problem at hand as well as you can, shout about it loudly — it makes you a far more tempting investment target. Strong social mission [Slide 14] Having a social mission component can help give investors the warm-and-fuzzies. Image Credits: SateliotSome investors have a social responsibility mandate as part of their investment theses. That could go in your favor if your company is in alignment with doing good in addition to doing well. But what is also true is that all investors are human beings, and it can never harm to have a heart-forward aspect to your story. Sateliot explains that once its satellites are up and running, there is almost no marginal cost to being able to offer its services to certain customer groups. In other words: If you want to GPS-track rhinos, you can do so for almost no money. As I said, that doesn’t matter to all investors, but in this case, you’re creating a win-win. Zero marginal cost means that there’s no real downside to offering the company’s services to causes that improve the planet and plenty of potential upsides. In addition to making the world a better place, there are PR opportunities, ESG advantages and secondary benefits to the company. Sateliot could very easily not have included this in its story, but it makes me happier that they did. The lesson here is

With $8.6M in seed funding, Nx wants to take monorepos mainstream • ZebethMedia

Narwhal, the company behind the popular monorepo-focused open source Nx build system for JavaScript code, today announced that it has raised an $8.6 million seed funding round co-led by Nexus Venture Partners and Andreesen Horowitz. A number of angel investors, including GitHub co-founder Tom Preston-Werner, also participated in this round. Founded by two former Google employees on the Angular team, Jeff Cross (CEO) and Victor Savkin (CTO), Narwahl actually started out as an Angular consulting shop, helping large banks, airlines and other enterprises — the kind of companies that typically use Angular. As Cross told me, it was working with Capital One that actually pushed the team to pursue Nx and turn that into the company’s main product. At that point, the concept of monorepos was already very familiar to them, thanks to their work at Google, which uses one of the world’s largest monorepos to manage its codebase. Image Credits: Nx “They had their login team,” Cross explained. “If you logged in to CapitalOne.com, it’s seven lines of business building one unified app — and it was split across so many repositories, they couldn’t coordinate on deploys, they couldn’t coordinate really on anything. And they really needed a monorepo. And so we built Nx for their use case and then made it work with every other client we were working with, which was most of these large companies.” Cross believes that monorepos are inherently easier to manage for large teams. The founders, he said, were spoiled at Google because thanks to the monorepo, any developer could build any part of Google’s codebase with minimal effort. Everything, after all, used the same tool chain and testing infrastructure. Meanwhile, having many teams work on different repositories creates a lot of friction, given that the teams then have to build a common API — and create a new repository for it, create the integration process and figure out how to publish that. “And with publishing, inevitably every company adds versioning to the publishing. So it’s never ‘we publish every commit and it’s immediately updated in the repository.’ It’s more like: ‘we publish it, we use somewhere to say if this a breaking change, a minor one, or is this a patch? And what that ends up happening in most companies is that they never get the time to actually update it,” Cross said. So the idea behind Nx is to give every company the tools to manage their JavaScript monorepos — and migrate them to one if necessary. As Cross explained it, the open-source Nx project and Nx Cloud help companies organize their code in these massive repositories, using Nx’s concept of project graphs. It’s worth noting that Nx was great inspired by Google’s Bazel build and test system, so it includes some familiar features like the ability to distribute computation and task execution across multiple machines. Cross cited one major retail giant the company is currently working with that made the move to Nx’s enterprise product and now saves over 40,000 hours of compute time a month thanks to its distributed caching system. One of the nice features of Nx (and also Bazel, to be fair), is that it knows when two developers are trying to run the same tasks and checks if there is already a cached version. Narwhal/Nx is already a bit ahead of most open-source companies at the seed stage in that it already has a hosted service (Nx Cloud) and an enterprise version as its main products. Given the kind of large enterprise customers Nx works with, it’s no surprise that Nx offers them the ability to run the service in their private instances and isolated from external APIs. The company currently has just over 30 employees on its team, which is mostly remote. Of those, 25 are engineers. Most recently, Narwhal also took over the stewardship of Lerna.js, a popular open-source JavaScript monorepo tool that had previously remained somewhat unmaintained. Narwhal will now provide critical bug fixes and security updates for it. “Monorepo adoption is exploding worldwide, driven by advantages like ease of collaboration, shared codebase visibility, dependency management, and refactoring,” said Abhishek Sharma, managing director at Nexus Venture Partners. “However, as monorepos scale, robust tooling becomes essential to managing them, and Build Time becomes a critical factor. This is where Nx shines. We were drawn to Nx because of its world-class team, category leadership, strong developer community, and massive global adoption: from startups to Fortune 500 companies. We’re grateful to Jeff and Victor for choosing us as their partner in this journey.”

SaaS startups that ignored VC advice to cut sales and marketing better off this year

Venture-backed startups have had to make myriad spending cuts this year in an attempt to either live up to a high valuation, minimize their burn rate or both. But new data from fintech Capchase shows that many startups — especially venture-backed ones — seem to be getting the wrong advice concerning where to downsize. Capchase, which lends non-dilutive capital to SaaS startups, looked at how more than 500 SaaS startups fared in a number of areas including revenue, runway and growth between August and December 2021 and between April and August 2022. One big takeaway was that companies that didn’t cut spending on sales and marketing were in a better financial and growth position now than those that did when the market started to dip in 2022. Miguel Fernandez, the co-founder and CEO of Capchase, said he was initially surprised by this finding because that doesn’t line up with the advice many VCs are giving their portfolio companies — at least on Twitter. However, the results do align with the fact that Capchase also found that most bootstrapped software companies were performing better than VC-backed ones this year — but more on that later.

Speak lands investment from OpenAI to expand its language learning platform • ZebethMedia

Speak, an English language learning platform with AI-powered features, today announced that it raised $27 million in a Series B funding round led by the OpenAI Startup Fund, with participation from Lachy Groom, Josh Buckley, Justin Mateen, Gokul Rajaram and Founders Fund. Notably, Speak is the third startup in which OpenAI, the AI lab closely aligned with Microsoft, has publicly invested through its fund — the others being Descript and Mem. OpenAI Startup Fund participants receive early access to new OpenAI systems and Azure resources from Microsoft in addition to capital. “We are very excited to partner with the outstanding team at Speak, who are well-positioned to deliver on this powerful application of generative AI — making language learning effective and accessible,” Brad Lightcap, OpenAI’s COO and the manager of the OpenAI Startup Fund, said in a statement. “Speak has the potential to revolutionize not just language learning, but education broadly, and this aligns with the OpenAI Startup Fund’s goal of accelerating the impact of powerful AI to improve people’s lives.” Speak was founded in 2016 by Connor Zwick and Andrew Hsu, both of whom had an acute interest in AI from an early age. Hsu has a health background, having completed a neuroscience PhD at Stanford before joining Zwick to co-launch Speak. Zwick came from the edtech industry — he sold his first startup, the flashcard app Flashcards+, to Chegg in 2013 after dropping out of Harvard. Zwick and Hsu met through The Thiel Fellowship originally, Hsu being in the first cohort and Zwick in the second. (Note that Founders Fund, which Thiel co-founded, pledged cash toward Speak’s Series B.) Prior to starting Speak, the two spent a year studying and researching machine learning and developing accent detection algorithms using YouTube videos as training data. “Most language learning software can help with the beginning part of learning basic vocabulary and grammar, but gaining any degree of fluency requires speaking out loud in an interactive environment,” Zwick told ZebethMedia in an email interview. “To date, the only way people can get that sort of practice is through human tutors, which can also be expensive, difficult and intimidating.” Image Credits: Speak Speak’s solution is a collection of interactive speaking experiences that allow learners to practice conversing in English. Through the platform, users can hold open-ended conversations with an “AI tutor” on a range of topics while receiving feedback on their pronunciation, grammar and vocabulary. The premise might sound like Duolingo and some of the other AI-powered language learning apps out there, such as Yanadoo, ELSA and Loora. But Zwick insists that Speak’s AI tech is superior to most. “Under the hood, we combine the latest from OpenAI with in-house models to deliver the best performance across speech recognition, speech generation and conversation generation,” he said. “We’re able to provide feedback on things like pronunciation and more natural vocabulary and syntax using [our] models … We are accumulating a substantial data set of second-language labeled speaking examples, which enables us to uniquely deliver state-of-the-art speech models for foreign accented speakers.” Whether that’s true is up for debate. Speak didn’t provide any empirical data showing its platform outperforms rivals. But what Speak does demonstrably have is early momentum. It’s one of the top education apps in Korea on the iOS App Store, with over 15 million lessons started annually, 100,000 active subscribers and “double-digit million” annual recurring revenue. Speak offers auto-renewing monthly and annual subscriptions, both of which provide access to courses, electives and review content in addition to the AI-guided practice sessions. For Speak’s next act, the company plans to expand to new languages and markets, including Japan, and invest in features that leverage text-generating models like OpenAI’s GPT-3. “The pandemic accelerated remote work and the expansion of global, distributed teams, meaning there’s even more demand for people around the world to speak the same language. It’s also driven demand for new solutions more oriented around remote or programmatic experiences as opposed to in-person instruction.” Zwick added. “Speak has remained fairly lean and has multiple years of runway enabling it to control its own destiny regardless of the fundraising environment over the next few years.” Currently, Speak has 40 employees across offices in San Francisco (its headquarters), Seoul and Ljubljana, Slovenia. Zwick says that the new funding, which brings Speak’s total raised to “just over” $47 million, will be put toward expanding the company’s engineering, machine learning, product, marketing, content and operations departments.

Corporate comms for the startup soul • ZebethMedia

 Hello and welcome back to Equity, ZebethMedia’s venture capital focused podcast where we unpack the numbers and nuance behind the headlines. Today we have something a bit different for you. In light of the never-ending Musk-Twitter saga, and news that the new social media CEO had cut its corporate communications staff to the bone — and then some. So to get more perspective on the role that a corporate comms team plays in both startups and public companies alike, we wrangled two folks who have just that experience set: Kelly Boynton, senior director of communications at Gusto Keyana Corliss, until recently the head of global communications and PR at Databricks The pair discussed the role that comms plays in companies both internally and externally, and why it deserves a seat at the decision-making table. Given the media furor surrounding Musk himself, you can imagine that we had a lot to talk about. Oh, and Keyana has a podcast that I was a guest on, in case you want to hear more from her! Regular service returns tomorrow! Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. ZebethMedia also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!

ReadySpaces, which offers co-warehousing spaces to corporate customers, secures $20M in debt • ZebethMedia

Jon Zimmerman — the co-founder of ReadySpaces, a warehouse storage provider for small businesses — was working in the self-storage market when he had the idea for a product with the flexibility of self-storage but the capabilities of a traditional warehouse, aimed primarily at enterprise customers. His partner, Kevin Petrovic, had a different company that was a customer of Jon’s at his first “beta” location, in the ’90s. The two started working together to grow ReadySpaces — formerly CustomSpace — into a nationwide business. Today, ReadySpaces operates 32 warehouses and services a customer base of over 2,000 businesses. That impressed investors, evidently, who pledged $20 million in the startup as a part of an all-debt funding round that closed today. Bringing ReadySpaces’ total raised to $40 million, the new funding will fuel expansion, Petrovic says, as ReadySpaces prepares to roll out new services. Why opt for debt as opposed to equity? Petrovic claims that it was “the most efficient capital structure for growth” given the current financial environment. It’s definitely true that equity is harder to come by these days, with valuations dropping and debt financing slowly gaining in popularity. “We have an ambitious growth plan for 2023 and this capital will allow us to remain the leader in the co-warehousing space,” Petrovic told ZebethMedia in an email interview. “Certain pandemic-related pressures, such as backups in major ports, have eased, but we see our business model continuing to resonate every day for both established businesses and small companies just starting off.” While ReadySpaces has been around in some form since 2013, it’s only in recent years that co-warehousing has become a hot trend. The pandemic supercharged co-warehousing, which allowed physical goods businesses (e.g., manufacturers of household products and construction materials) dealing with supply chain challenges to store inventory without having to purchase a facility. In a co-warehousing setup, multiple companies can use the same warehouse space — eliminating the need for the companies to invest in the infrastructure themselves. For example, ReadySpaces offers co-located units in sizes ranging from 200 to 5,000 square feet, each equipped with power units, loading docks and forklifts, Wi-Fi, industrial workspaces, and private offices and conference rooms. A view of a ReadySpaces facility in Tukwila, Washington, where the startup has a sizable hub. Image Credits: ReadySpaces Petrovic posits that co-warehousing lets businesses insure against economic uncertainty and busy periods, such as holidays, by providing affordable, scalable storage for reserve inventory. “The need for small warehouse space isn’t constrained to small businesses,” Petrovic said. “We’ve worked with numerous Fortune 500 companies to provide short-term overflow space. The key is that we take an asset class that moves slowly and is generally difficult to operate in and make it absolutely seamless.” Certainly, ReadySpaces’ competitors have demonstrated the demand for co-warehousing. Saltbox, a company providing co-working and warehousing space for up-and-coming e-commerce businesses, recently attracted a $128 million investment from real estate investment platform Fundrise to expand its footprint. And last year, private equity real estate firm Capstone Equities launched Portal Warehousing, a flexible warehouse solution offering smaller spaces and share amenities, which plans to expand to cities, including Los Angeles, Brooklyn and Las Vegas, in the coming months. As for ReadySpaces, Petrovic claims that the Los Angeles–based company — which employs around 50 people — is “comfortably profitable,” with revenue growing approximately 50% year over year. “Since our last announcement, we have opened numerous new locations and in a few new markets as well. For example, Queens, New York; Kearny, New Jersey; Saddle Brook, New Jersey; and Round Rock, Texas, are all recent new sites,” Petrovic said. “We don’t have a burn rate … Nationally, we’ve seen demand skyrocket by 375% over the last three years.” One point of concern is a slowdown in consumer spending related to inflation, which could depress sales in retail and, by extension, the demand for warehouse space. The warehouse industry is running the risk of oversupply, some experts say, as developers heavily invest in warehouse expansion. Q2 2022 saw a record 613 million square feet of warehouse space built in the U.S. — almost double the construction pipeline in 2019. Petrovic acknowledged the headwinds, but insisted that ReadySpaces is in a position to weather them. “There are numerous major shifts in the industrial real estate market happening now due to robust demand and high development costs,” he added. “Our focus is on navigating these market changes successfully so we can continue to provide the product that we know customers love.”

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